The Only Reason Why the iPad Mini Won't Matter

It's finally coming.

We think.

The blogosphere was all aglow on Friday about the likelihood of Apple (NAS: AAPL) finally willing to play small ball with its industry-leading iPad. Sources claim that the world's most valuable tech company will introduce the iPad Mini on Oct. 23, giving it plenty of time to hit the market ahead of the holiday shopping season.

The market's not exactly buzzing with excitement, but give the fine marketing folks at Cupertino some time. Once the details are out, folks will start camping out at a local Apple Store near you.

Then again, what if Apple builds it, and they don't come? As logical as it would seem for Apple to put out a more portable iPad to compete with the glut of seven-inch tablets on the market, it's a battle that Apple may not be able to win.

After all, how do you price these suckers?

The iPad Mini's got a problem
Earlier this year, Apple could've owned this market.

The most popular entry-level tablet was's (NAS: AMZN) Kindle Fire. It fed right into Amazon's vibrant ecosystem of digital books, videos, music, and Android apps, but it wasn't perfect. There was no camera. The display was lacking. There were limitations to the 8 gigabytes of storage.

Then again, at $199 it was hard for buyers to complain.

A smaller iPad would've made a killing then, even at a $299 and possibly even a $349 price point.

It's a whole new ball game now.

That Kindle Fire has been updated a bit and slapped with a $159 price tag. The new Kindle Fire HD adds the camera, beefs up the graphics, and doubles or quadruples the storage starting at the original $199 price point.

Just weeks before Amazon improved and widened its tablet line, Google (NAS: GOOG) decided to show Android makers how it's done by introducing the Nexus 7 for as little as $199.

Are you starting to see why the iPad Mini is shaping up to be a bad bet for Apple? The product makes sense, but there isn't a single price point that makes sense.

It's a quandary for Cupertino
If Apple decides to match that $199 price point that Amazon and Google are succeeding with, it will come at the expense of the $499 iPad. Why would someone pay more than twice as much for the original 9.7-inch iPad when sacrificing a chunk of screen size can save $300?

Of course, Apple isn't going to price the iPad Mini at $199 or even $249. It would have to sacrifice too many features to boost the value proposition of its full-sized tablet. Sure, it could skimp on the camera (the way it did on the original iPad) or lose the Retina Display. It can shave storage capacity. However, then the iPad Mini would be seen as ridiculously inferior to the comparably priced Kindle Fire HD and Google Nexus 7.

Apple has a problem, and it's that it wants to make a profit on its hardware at the same time that Google and Amazon are willing to set all or below cost. They simply want market share, and as a late entry into the small-sized tablet market, Apple has surprisingly plenty to lose.

Oh, and did I mention that this will all be taking place as this month's rollout of Microsoft's (NAS: MSFT) Surface aims squarely at the larger iPad? And if we're eyeing the iPad Mini as a way for parents to hand their young kids a cheaper tablet to play with, can we start having Toys R Us' tabeo tablet in the conversation at $149?

There is no right price for the iPad Mini, and it will be Apple that pays the price for that unanswerable dilemma.

If the iPad Mini is too cheap, the iPad suffers. If the iPad Mini is too expensive, no one will buy it. Skimping on features will make it dead on arrival. Loading too many of the features of its larger sibling will destroy the sibling's appeal.

Are you still excited about the iPad Mini? I'm not -- and I'm a pretty big fan of most things Apple.

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Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple,, Google, and Microsoft. Motley Fool newsletter services recommend, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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